When the mightiest online retailer in the world, Amazon, has to bow to Apple’s demands and cut ties to its ebookstore in the Kindle app, we know we’re facing a big problem. Retailers have lost an important battle to stop Apple turning its hardware dominance into control over content sales. It’s now time for publishers to step in and challenge Apple for the sake of the long term health of the market for ebooks and reading. There’s an easy way to do it.
Apple’s demand—that it get a 30% commission on all sales made through in-app purchases—was clearly a non-starter for retailers who could never meet it and Apple knew this. The only ones who can pay that sort of cut are the publishers and Apple will deal directly with them. So Apple and its iBookStore now enjoys a major advantage over other retailers: it offers the simplest, most convenient shopping experience of any ebookstore on the dominant iOS platform.
This might seem like a small detail. But small irritations from things that don’t quite work turn consumers off. Apple built the world’s biggest tech company by understanding this critical point: good enough just isn’t good enough. So by forcing its competitors’ customers through a more complicated route to purchase, Apple and its iBookStore could be heading for a similar dominance in ebooks that it enjoys in music downloads.
There’s a lesson here for the book industry. The music industry found out last decade how making it easy for consumers to buy can lead to a big share of the paid digital market. In fact, Apple was so good that it even convinced consumers to buy music instead of taking it for free. Now it has a 65% share of the entire market for paid music downloads making it too big for music publishers to argue with.
But there’s also an important difference that book publishers should take note of: unlike iTunes and digital music, Apple’s iBookStore is a disappointment so far. It hasn’t measured up to early expectations. By most estimates, Apple’s share of the ebook market is still in single digits.
So now is the ideal time for publishers to confront Apple. Apple’s ebook sales are not critical to publishers yet Apple can potentially do huge damage to the industry long term if its current course continues.
The way to stop Apple doing more harm is simple: refuse to supply it with the key titles its iBookstore needs to present a credible offering.
Doing this will help level the playing field between Apple and its competitors by giving consumers a real choice: an easy purchase experience or a great selection of ebooks. The score for Apple vs Competition will be more like one-all instead of the one-nil that Apple’s tilted playing field created this week.
It can be done. Publishers set a precedent for collective action a year ago when they threatened Amazon and other ebook retailers with non-supply if they didn’t buckle under and accept the agency pricing model, ironically a move initiated to smooth Apple’s entry into the market.
Publishers might worry about potential anti-trust actions from such a strategy but they probably shouldn’t. Think about how tough it will be for the US Department of Justice to figure out which of the protagonists, Apple or the publishers, is abusing its market dominance more.
When we look at how much Amazon, Kobo (especially in international markets), Barnes and Noble and others have done to grow the market for ebooks and compare it to what Apple has done—almost nothing specifically for the book market—it’s clear what will best serve the long term interests of books and reading.
Apple is just a market share player in this industry and books are a minor product line for it. If it’s allowed to proceed along the track it’s on, it will grab a big share of a market that ultimately becomes much smaller than it should have been. We need more Kobos and Amazons who commit resources to opening up digital reading to new customers and encourage them to buy and read more.
So book publishers, especially the Big Six US publishers, take a cue from your music industry counterparts who must regret the last decade’s lost opportunities when a more diverse marketplace for digital music could have taken hold and multiplied. Stand up to Apple now. You’re in the best position to do it and readers, authors and channel partners alike will thank you for it.